Learn and Plan | Behavioral changes to help with financial fitness
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Behavioral changes to help with financial fitness

Apr 4, 2023, 2:27:16 PM | Reading Time: 3 minutes

Behavior change is a key component to establishing financial wellness because it creates habits and patterns. But it isn't easy to make adjustments in your life. To get there you need to have a plan, be realistic, and take small steps toward achieving your goals. Here are four tips that can help.

Set up SMART financial goals

Identifying specific financial goals can often be challenging. We all have biases that can steer us toward goals that aren't as important or pressing. Perhaps you were on vacation in Paris this summer and you fell in love with the city. When you got home you decided you want to vacation there every year. Taking a trip to one of your favorite cities is great, but spending that money every year means you might not be able to save as much for retirement or increase your emergency fund. You have to be careful to balance your financial life. Here are a few steps to creating goals that matter:

  • Figure out what goals matter most to you. Put everything on the table, even that yearly trip to Paris.
  • Sort your goals into three categories 1) Goals that are possible now. 2) Goals that will take a little time to achieve. 3) Goals that require a long-term strategy.
  • Apply a SMART- goal strategy by making sure your ambitions are Specific, Measurable, Achievable, Relevant and Timely.
  • Create a realistic budget. Find out exactly how much money is coming in and what’s going out, then write out a budget to keep your spending on track.
  • Put any leftover money from your budget into a savings account dedicated to long-term goals.
  • Monitor your progress. Stay on top of your budget and make any adjustments based on changes in your income or life events.

When setting goals, consider working with a professional who can offer you unbiased advice and help you prioritize goals that matter most to you and will help you achieve financial stability.

Track your spending

It's a good idea to get in the habit of tracking your spending regularly, so you know where your money is going and figure out where you may be overspending. Make sure to:

Take inventory of your accounts

Looking at your accounts will help you identify where you’re spending money and will help you to pinpoint problems.

Categorize your expenses

Break down your expenses into fixed and variable categories. Fixed expenses are things like mortgage or rent, utilities, insurance, and credit card payments that stay the same from month to month. Variable expenses are costs that will likely change every month, such as food, clothing, and entertainment.

Use a budgeting app

Budgeting apps can help you better manage your money. Apps allow you to gather all of your accounts and bills in one place so you can conveniently manage your finances from one dashboard and easily create budgets.

Avoid emotional money decisions

Emotional situations can cause you to make bad financial decisions. From anxiety and stress to embarrassment, to feeling overwhelmed, your financial situation can cause you to throw logic out the window. If emotions and money often mix in your life, take the time to understand your attitude toward spending and investing so you don't continue making impulsive decisions. It's better to take some time to cool off and weigh practical options before acting emotionally. If you can't separate emotion and money, think about seeking some professional help to deal with the underlying problems you might have. There's no shame in asking for help. Finding less destructive ways to deal with life’s emotional swings is not only good for you financially, but it's also good for you mentally.

Get support

You don't have to weather the storm alone if you don't want to. It's okay to ask for help from trusted friends and family members. Don't be afraid to ask them to impart some financial wisdom.

It's often easy to forget that being money smart isn't just about knowing your numbers. As the name implies, financial wellness is also about making sure you have the right mindset.

REV 12/2019